BillyV
Antidisestablishmentarian
- Oct 31, 2011
- 592
- 118
- 78
I hear a lot these days about asking people and companies to pay their fair share in taxes. While Im not sure what a fair share is (it seems that everyone believes they are paying a fair share or more of their own income already), I wonder if that should be the deciding factor. Should tax policy be fair, or should it focus more on what is best for the country?
We have a determinable tax base from which to draw these revenues, so lets assume that expected revenue, without difficult to support GDP changes based upon certain plans, remains the same. How would you divide the taxpaying pie between the various income levels? We could conclude that it was the most beneficial to reduce the levels paid by the lower income levels, in order to spur consumption. Lower income households would tend to immediately spend those additional dollars on things they either want or need. Of course, since many of the products that are purchased by this group are made in China, it may not spur our economy to the extent you would think, and it would most certainly reduce the countrys saving rate and dollars available for investment, but there is a case to be made that it would increase economic activity, at least in the short term. If instead you reduce the levels paid by the upper income levels, those additional dollars will likely not be immediately spent, but invested in (hopefully) some productive endeavor. Again, some (probably fairly sizeable) percentage of those funds would also find their way to China as investments in plant or equipment, or in purchases of business assets. However, the savings rate of the country and the total pool of private capital would increase, theoretically spurring business investment. Setting aside what is fair, which do you think provides the best chance for long-term growth and prosperity? Is there an optimum level where consumers have enough to spend and the pool of capital is adequate?
We have a determinable tax base from which to draw these revenues, so lets assume that expected revenue, without difficult to support GDP changes based upon certain plans, remains the same. How would you divide the taxpaying pie between the various income levels? We could conclude that it was the most beneficial to reduce the levels paid by the lower income levels, in order to spur consumption. Lower income households would tend to immediately spend those additional dollars on things they either want or need. Of course, since many of the products that are purchased by this group are made in China, it may not spur our economy to the extent you would think, and it would most certainly reduce the countrys saving rate and dollars available for investment, but there is a case to be made that it would increase economic activity, at least in the short term. If instead you reduce the levels paid by the upper income levels, those additional dollars will likely not be immediately spent, but invested in (hopefully) some productive endeavor. Again, some (probably fairly sizeable) percentage of those funds would also find their way to China as investments in plant or equipment, or in purchases of business assets. However, the savings rate of the country and the total pool of private capital would increase, theoretically spurring business investment. Setting aside what is fair, which do you think provides the best chance for long-term growth and prosperity? Is there an optimum level where consumers have enough to spend and the pool of capital is adequate?